Thursday, September 17, 2009

When the Lack of Oversight on Government Contracts Has Dire Consequences

One of the most blatant examples of contractors running amok with little to no oversight has come to light recently as a result of an investigation and subsequent report by the Project on Government Oversight (POGO). This report was created based on information from current and former employees of ArmorGroup North America Inc., hired to protect the U.S. embassy in Afghanistan. The report and subsequent information provided by POGO is something that one would fine by cross pollinating a Stephen King novel with Lord of the Flies, where security contractors were forced to participate in a variety of lewd activities, hazing, and other lascivious acts or risk losing their jobs. Although the behavior by ArmorGroup personnel is inexcusable and leaves ones bereft for words, the real issue is how this happened, and how it could have been prevented.

According to the POGO report, concerns about the ArmorGroup contract have been addressed by the State Department, which administers the contract, for over two years. These concerns repeatedly addressed a pattern of security violations, a pervasive breakdown in the chain of command, and discipline and morale issues.

…In July 2007, State issued a "cure notice," advising the firm of 14 specific deficiencies that were endangering the performance of the contract, including failure to provide an adequate number of guards, relief personnel and armored vehicles. Officials sent another cure notice in April 2008. But two months later, State decided to extend the contract for an additional year...

…This environment has resulted in chronic turnover by U.S./ex-pat guards. According to the State Department, "nearly 90% of the incumbent US/Expats left within the first six months of contract performance…

...Problems with the contract, particularly concerning staffing, persisted and in September 2008 the department threatened to terminate it. But in July, State renewed the contract through 2010, with an option to extend it through 2012. The contract is worth $187 million annually…

The report further examines the utter breakdown in State oversight, with toothless warning and notifications that allowed Wackenhut Services, Inc., the parent company of ArmorGroup, to continue its abysmal performance with no real consequences. Over the last two years, this contract has seen possible misrepresentation by Wackenhut executives to Congress through sworn testimony refuted by POGO, security and communications breakdowns, and creating an environment that fuels resentment and volatility that has far reaching effects on our mission and foreign perception in a culturally sensitive part of the world.

Other questions brought to bear by the report is the inherently governmental function of providing security in a combat zone by contractors, which carries the risks of cost-cutting and profit motive, personnel issues, and rules of engagement and accountability by contractors. These types of questions still remain unanswered, although they should have been answered by State years ago through investigation and proper contract management of security contracts in Iraq (e.g. Blackwater).

Although it is expected that State will finally terminate the ArmorGroup contract, the issue remains on how these oversight gaps will be filled in the future. Although State continues to take the issue very seriously in light of the POGO report and will continue to improve its oversight of State security contract overseas, the bigger question is the inherently governmental nature of providing security in a combat zone. As POGO recommends, the language in the 2009 National Defense Authorization Act should be clarified and strengthened to prohibit reliance on private security contractors for inherently governmental functions, and to include protection of the diplomatic mission in a combat zone as being inherently governmental. I do not believe this function is something that should be outsourced, as the most professional and dedicated security force in the world should go back to performing this function; the U.S. Marines.

This also brings into question appropriate disciplinary action against Wackenhut and ArmorGroup, as the nature and severity of their actions warrant disbarment and possible criminal proceedings against those employees who violated the law in the “performance” of their duties against other employees and local nationals. Only when the Government takes performance and oversight seriously, and holds contractors responsible and accountable for their actions, will this type of activity no longer take place. I do believe that the vast majority of contractors act in accordance with ethics rules and uphold high standards of integrity, but am troubled by the small percent that do not and corrupt the government contracting process with little or no accountability. Past performance has to be made a much stronger evaluation factor for future work, and should be the central focus of award guidelines in light of a renewed push for tracking past performance data. Nonetheless, strong contract administration and oversight are ultimately the key to ensure performance on contracts. If it were not for whistleblowers risking is some cases their safety, would we have known about the abuses at Abu Ghraib prison in Iraq or ArmorGroup in Afghanistan?

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.